Hello Readers,
Here is the weekend edition of Asia Communique!
India–China relations: cautious thaw
High‑level engagement resumes – Chinese Foreign Minister Wang Yi is scheduled to visit India from 18–20 August to meet national security adviser Ajit Doval. This will be only the second face‑to‑face meeting since the deadly 2020 border clash and reflects a gradual thaw following an October 2024 border‑patrol agreement. India’s Prime Minister Narendra Modi plans to travel to China later in August for the Shanghai Cooperation Organization summit – his first visit in seven years. Now, the world’s eyes will be on Wang Yi’s visit to New Delhi on Monday.
Reopening border trade and travel – Both governments have discussed reopening small trading posts along their disputed Himalayan border and resuming direct passenger flights suspended since the pandemic. The proposals would restart limited cross‑border commerce and symbolize a return to “normal” relations, even though border trade accounts for a tiny share of the US$127 billion bilateral trade.
Investment and tariff dynamics – India is reportedly considering easing investment restrictions on Chinese firms, partly in response to the United States’ decision to cancel bilateral trade talks and impose up to 25 % tariffs on Indian exports because of India’s continued purchases of Russian oil. Analysts note that Washington’s pressure is nudging New Delhi and Beijing back towards engagement. India’s exports to China have fallen for two consecutive years, declining 14.45 % in FY2024‑25 to US$14.25 billion, while the trade deficit widened to US$99.20 billion.
Taiwan & Cross‑Strait dynamics
Propaganda and military posturing – The People’s Liberation Army released a documentary showcasing its latest Type 075 amphibious assault ship and the Fujian aircraft carrier, likely to intimidate adversaries. State media also aired a film of the China Coast Guard towing a Philippine vessel and practising a rapid “cold start” to full‑scale assault, accompanied by denunciations of Taiwanese “independence activists”.
Information war and cultural messaging – Taiwan will air Zero Day Attack, a television drama depicting a PRC invasion scenario. Producers say the show aims to raise public awareness of information warfare and infiltration in temples, elections and organized crime. PRC commentators condemned the series as fear‑mongering and accused Taiwan’s ruling Democratic Progressive Party of using citizens as “cannon fodder.”
Cross‑strait tension at sea – On 2 August a Chinese coast‑guard vessel deactivated its transponder and patrolled near Taiwan’s Pratas Island for 24 hours, part of a pattern of increased enforcement around Taiwan’s outlying islands. Analysts liken the strategy to the “Kinmen model”, whereby Beijing seeks to normalize its law‑enforcement presence and assert jurisdiction.
Economic leverage and U.S. tariffs – The U.S. imposed 20 % tariffs on Taiwanese imports on 7 August. Beijing responded by pushing for greater cross‑strait economic integration and criticizing Taiwan’s Democratic Progressive Party (DPP) as a pawn of the U.S.; Taipei’s government has proposed a US$3.1 billion special fund and is negotiating with Washington to mitigate the tariffs.
PRC outreach – China’s Taiwan Affairs Office announced a series of cross‑strait exchange activities in August covering youth, sports, culture and religion, emphasizing that exchanges “will not stop, will not be cut off and will not diminish.”
Trump Says Xi Pledged No Taiwan Invasion During His Presidency
Former U.S. President Donald Trump claimed on Friday that Chinese leader Xi Jinping personally assured him China would not move against Taiwan while Trump remained in office.
In an interview with Fox News, Trump recounted his conversations with Xi, saying:
“He told me, ‘I will never do it as long as you’re president.’ … But he also said, ‘I am very patient and China is very patient.’”
Trump’s comments came just ahead of his planned talks with Russian President Vladimir Putin over Moscow’s ongoing war in Ukraine. He drew a parallel between Russia’s invasion of Ukraine and the possibility of a Chinese military action against Taiwan, but insisted he did not believe such a scenario would unfold during his tenure.
Context and Reactions
The Chinese embassy in Washington declined to comment on Trump’s remarks. Beijing has long asserted that Taiwan is part of its territory and has not renounced the use of force to achieve unification. Taiwan, for its part, strongly rejects Beijing’s sovereignty claims.
Trump and Xi held their first confirmed phone call of Trump’s second term in June, with Trump later noting that Xi had reached out again in April, though without details.
The United States, while maintaining no formal diplomatic ties with Taipei, remains Taiwan’s principal security partner and arms supplier. Washington’s stance — rooted in “strategic ambiguity” — leaves questions over how it might respond to a potential Chinese assault, even as bipartisan consensus has hardened around strengthening support for Taiwan.
Why It Matters
Trump’s revelation underscores both the personal nature of U.S.-China diplomacy during his administration and the uncertainties shaping cross-strait dynamics. While Xi’s pledge may have reduced the immediate risk of a Taiwan crisis during Trump’s tenure, Beijing’s insistence on eventual unification — coupled with Taiwan’s firm resistance — ensures the issue remains one of the most volatile flashpoints in Asia.
Beijing’s Top Diplomats Face Scrutiny Amid Uncertainty
Sun Haiyan, deputy head of the Communist Party’s International Department, publicly pushed back against a Reuters report suggesting she had recently been questioned by Chinese authorities. “Well, I’m here,” Sun remarked when asked directly, dismissing the reporting as “irresponsible.”
Reuters had earlier reported, citing three sources with knowledge of the matter, that Sun was taken for questioning earlier this month, around the same time as Liu Jianchao — her superior and a leading candidate to become China’s next foreign minister. The Wall Street Journal and Reuters had already confirmed Liu’s questioning, with Reuters noting his Beijing home was searched in early August following overseas trips to Singapore, South Africa, and Algeria. It remains unclear whether Liu is still being held.
The apparent detention of Liu marks the most senior disappearance of a Chinese diplomat since former Foreign Minister Qin Gang was abruptly removed in 2023 after a lengthy unexplained absence. Profiles of both Liu and Sun still remain online on the International Department’s official website, and neither the State Council Information Office nor the International Department have responded to Reuters’ renewed requests for comment.
Sun, 53, is the first woman to serve as deputy head of the International Department. A veteran of the department since 1997, she previously served as China’s ambassador to Singapore between 2022 and 2023, and earlier held posts ranging from Party spokesperson to local Party leadership in Shandong. Sun reappeared at Indian Independence Day event in Beijing on August 15. That put an end to rumors about her detention — for now.
The simultaneous scrutiny of Sun and Liu signals a rare moment of turbulence inside China’s diplomatic hierarchy, raising questions about the political currents shaping Beijing’s foreign policy establishment.
Politics, human rights and security
Japanese war‑memory tensions – On the 80th anniversary of Japan’s WWII surrender, Agriculture Minister Shinjiro Koizumi visited the Yasukuni Shrine, which honors Japan’s war dead including convicted war criminals. The visit drew protests from China and South Korea; Prime Minister Shigeru Ishiba sent a ritual offering but avoided the shrine. Both ministers emphasized respect for the dead while foreign critics urged Japan to face its wartime actions. China’s foreign ministry said countries must “face up to and reflect on their history.” South Korea’s President Lee Jae Myung is due to visit Tokyo for security talks.
Hong Kong activism – Australian authorities granted asylum to exiled Hong Kong pro‑democracy legislator Ted Hui, who fled in 2020 and faces multiple charges under Hong Kong’s national security law. Beijing condemned Australia’s decision and warned against “sheltering criminals.” Separately, former U.S. president Donald Trump told Fox News he would “do everything” to save jailed Hong Kong media tycoon Jimmy Lai, promising to raise his case in trade talks; China condemned the remarks and called for non‑interference.
Korean peninsula – The Institute for the Study of War reports that Chinese authorities allowed five North Korean tankers (four under UN sanctions) to sail through China’s exclusive economic zone, contravening UN regulations and illustrating Beijing’s support for Pyongyang. The same report notes increased Chinese coast‑guard incursions into waters around Japan’s Senkaku Islands.
Economics and trade
Malaysia navigates tariff headwinds – Malaysia’s GDP grew 4.4 % in Q2, matching Q1 but slightly below expectations. Central bank officials said new U.S. tariffs—including a 19 % duty on Malaysian exports and threats of a 100 % duty on semiconductors—cloud the outlook. The bank cut rates and trimmed its 2025 growth forecast to 4 %–4.8 %, hoping domestic consumption and tourism will offset weaker exports.
Indonesia’s fiscal and AI plans – Indonesia will not introduce new taxes in 2026; instead, President Prabowo Subianto’s proposed US$234 billion budget aims for a 9.8 % revenue increase through internal reforms. Separately, a draft national AI roadmap proposes creating a sovereign AI fund managed by the sovereign wealth fund Danantara Indonesia. The plan envisions public‑private financing for AI research and infrastructure between 2027–2029 but cautions that Indonesia remains in the early stages of adoption, facing challenges such as talent shortages and uneven connectivity.
China’s economic slowdown – China’s industrial output rose 5.7 % year‑on‑year in July (down from 6.8 % in June) and retail sales grew 3.7 %, missing forecasts. Fixed‑asset investment increased by only 1.6 % in the first seven months of 2025. These numbers underscore sluggish consumer demand and lingering property-sector woes.
Energy and sanctions – U.S. President Donald Trump said he has no imminent plans to penalize China for buying Russian oil but may revisit the issue soon; he recently slapped a 25 % tariff on Indian goods because of India’s Russian oil purchases.
Reads:
Prabowo Shakes Up Indonesia With Push to Emulate China’s Rise — Bloomberg
Note: The newsletter was updated while mentioning Sun Haiyan’s reappearance at the Indian Independence Day event in Beijing.